Abbott ordered to pay J&J $1.7 billion, breaking the record for patent verdict

Abbott Laboratories (ABT) probably did not want to be the one to break this particular record, but it wasn't up to the big pharmaceutical company. It was up to a jury, and the jury ordered Abbott to pay Johnson & Johnson (JNJ) $1.67 billion for patent infringement of its rheumatoid arthritis drug Humira -- making it the largest patent verdict in U.S. history.

Abbott's best-selling drug, Humira, competes with Remicade, a drug made by J&J's Centocor unit. Centocor claims it has licensed a technology from New York University, and that Abbott is using the same one to make Humira. This technology, called anti-TNF, blocks tumor necrosis factor proteins in the blood to prevent inflammation that can cause further symptoms.
Abbott argued that it wasn't using the same technology and that the products are different, as Humira is made only of human antibodies while J&J's Remicade uses both mouse and human DNA.

The case was decided in a federal court in Marshall, Texas, where the jury sided with J&J after only five hours of deliberations Monday. The jury found that Abbott's actions were willful and that it owes J&J $1.17 billion in lost profits and $504 million in royalties -- less than the $2.1 billion Centocor was seeking. Abbott said it would appeal the verdict as J&J's own admission at the trial regarding the time line would invalidate the human-only DNA patent.

J&J was pleased, of course. In a statement, Kim Taylor, the president of J&J's Centocor Ortho Biotech Inc. unit said, "We are particularly gratified that the jury recognized our valuable intellectual property, finding our patent both valid and infringed."

The judgment was quite a blow to Abbott, as Humira is the biggest seller for the company, with about $4.5 billion in global sales last year, or about 15 percent of Abbott's total revenue. Humira is approved for six conditions, including psoriasis and Crohn's. J&J is not seeking to block the sale of Humira, but rather to get a cut of the profits. While this could definitely dent Abbott's bottom line, it's not clear by how much. Abbott has projected global sales growth of Humira of 15 to 20 percent this year.

And Abbott's troubles don't end here. Bayer AG's HealthCare unit is also trying to collect royalties on Humira. Meanwhile, Abbott has its own patent-infringement lawsuit against J&J for a drug made with only human antibodies.

So, at a time when President Obama is trying to push healthcare reforms, Big Pharmas keep quarreling in court over patents. As it is, Americans often pay more for drugs than citizens in other countries, and while these litigation costs may be tiny compared to development costs, the trials don't help the companies' image. Right now, with the administration looking to cut costs and considering allowing biosimilars (generics of biological pharmaceuticals), Big Pharmas should perhaps try to settle these issues with less noise.